MUMBAI: You walk into a kids store and you see Sponge Bob backpacks, a sipper of Lightning McQueen from Cars, or a t-shirt with the word Barbie embossed on it. Licensed merchandises are everywhere today.
The retail licensing business in India is estimated to be worth $1.26 billion where entertainment license is valued at $406 million, sports licensing at $30 million and fashion licensing at $594 million. However, Indian brands make up less than 10 per cent of licensing and merchandising activity in India.
The Indian licensing and merchandising market is primarily dominated by Disney followed by Viacom18 and Turner (Cartoon Network). While Disney merchandise has been available in India for over 30 years, Viacom entered the business only 8 years back and already has a large share in the segment.
Viacom18 Consumer Products is a significant player in the ever-growing consumer products space with its diverse portfolio. Viacom18 has channels including Colors, Nickelodeon, Comedy Central, Vh1 and MTV and sells licensed merchandises for its marquee characters including perfumes, jewellery, footwear, watches, bottles, tiffin boxes, apparel, backpacks, jackets, beauty products, etc.
The advancements in technology and expanding marketplaces have been key to successful licensing programmes in India in the last few years. But local trademark owners and licensees need to now follow in the footsteps of international brands and adopt licensing as a core revenue stream.
While the licensing business is pretty fascinating, it has its own challenges. While you may be able to buy a licensed product in a store or a mall at Rs 200, you will find the same product being sold at street corners for Rs 100. Counterfeit is a huge challenge for the industry and though it can’t be completely eradicated, it can, however, be reduced by exercising raids and creating consumer awareness.
License India recently concluded its trade show India Licensing Expo 2018 for the budding licensing fraternity to apprise themselves on the concept of licensing as a business module, and explore exhibited licensing opportunities in multiple product categories. The show gathers the potential of the industry to network and connect, to further explore possibilities to grow bigger and faster in the given peripheries.
Indiantelevision.com spoke exclusively to Voot Kids, INS and consumer products business head Saugato Bhowmik and Viacom International Media Networks London VP licensing and business development Dan Frugtniet where they discussed the licensing business in India, the scope and challenges, their target consumer and much more. Excerpts:
Licensing is relatively new in India as an organised sector. How do you view the segment?
Saugato Bhowmik: Licensing is an exciting business where India has grown rapidly. It is a young industry and there are a lot of brands that have come to India which have been led by us and our friendly competitors but we still need more brands to come in.
How big is the licensing sector in India? What is the market size?
Saugato Bhowmik: As per our estimate, the licensing business today is around $1.4 billion of retail sales which includes all kinds of licensing — fashion, sports, entertainment and characters. Viacom18 operates in about 40 per cent of the licensing segment which is in entertainment and character licensing and some part of the sports licensing. It has been an exciting journey for the last 5-6 years for Viacom18 consumer products because we have grown rapidly.
What is Viacom18 Consumer Product’s market share in the licensing business?
Saugato Bhowmik: There is no way to identify the market share of any player as there are no syndicated industry reports that suggest market share. Also, it’s difficult to identify the market share of a business that is a horizontal multi-category business. However, what we’ve learnt from our partners is that Viacom18 Consumer Products is the second largest consumer product business in India. The number one player has been in India for 30 years, whereas we have been here for only 6-7 years but we have grown aggressively in the last five years.
But licensing as a business is still expensive in India…
Saugato Bhowmik: If you are going to add the value to the brand to a product, that price incremental will happen. Yes, some licensed merchandises like toys, hard lines are important because a lot of the manufacturing base is not yet in India. The Indian government, on the contrary, wants the manufacturing to move to India because that is when the pricing will go down and the industry will grow further. It’s slow going on that front, but we expect that in the upcoming years, as more consumers move into this piece, the demand will grow and you will see manufacturing base growing further.
What are your most popular characters for licensing and merchandising?
We are primarily structured around our brands SpongeBob, Teenage Mutant Ninja Turtle, Dora, Shimmer and Shine and others. We also have Viacom18’s own homegrown animation that has been tremendously successful. Motu Patlu, Gattu Battu, Shiva and Rudra have been some of our exciting properties. Motu Patlu is in the top three brands in India at any given time. We are also seeing spectacular results with Shivaas well.
You are here at the India Licensing Expo 2018. What is Viacom18 looking at from this licensing expo?
Dan Frugtniet: India Licensing Expo is a place where common shareholders, stakeholders, licensees, licensors get together to build the industry. We need much more of this. We are a huge believer in these trade shows and expect the footfall to increase over the years. These trade shows are for long term building and commitment on partnership and trust because we need to meet our partners in person. It’s important to have domestic market trade shows where we can help home grown stakeholders have a meeting place but also where all licensors can come and expand their business by meeting their partners.
What are the key challenges in this sector? What’s your plan to overcome them?
Saugato Bhowmik: There are a lot of challenges for licensing business in India in terms of infrastructure, retail fragmentation and depth of audience. But all the metrics are in the right direction and the economy is in the right direction. The e-commerce is headed in the right direction and the audience is now understanding the importance/worth of licensed merchandise. We are getting better at it with more licensees coming into the business, more distributors being added to the business, more manufacturers and retailers coming in. The industry is headed in the right direction but we have to continue investing as there is no easy growth. It’s still a long distance to go before licensing as an industry becomes massive yardstick business like it is in the UK and US.
Today, there are several international brands present in the market that have become kids’ favourite. Is there a competition and challenge for you to create distinguished products?
Saugato Bhowmik: There is no such theory to prove it and it’s all about brand love. Different people get attached to different brands. A fan of Motu Patlu who is five years old is obsessed with Motu Patlu. The concept of international and domestic doesn’t exist in kids’ head and it’s the characters that they fall in love with. This domestic v/s international characters may be the theory for adult audiences where they may view international brands as more premium. But I can’t really comment on it.
What about Roadies merchandise? We don’t get to see them a lot. What are your sales points for them?
Saugato Bhowmik: You can find Roadies collection on e-commerce sites. Earlier we had done several deals in the apparel and eyewear category. We have exited a lot of existing partnerships. We are going a little slow on youth space because we want the right partnership to happen for both MTV and Roadies. For youth, we don’t want to get a deal with smaller partners. While partnering with someone, we look at the product aesthetics, distribution, ability to market as it has to be at a different level altogether, which is why are taking it slow and selectively appointing partner.
The time between your deciding on launching merchandise and it actually hitting the shop is huge! How do you strategise on what to launch and what to miss?
Dan Frugtniet: There is nothing worse for a brand owner than its product launch not working because it reflects badly on us. There’s a lot of time, energy and money that goes behind it and that’s why it is best to invest cautiously on youth market as it’s very difficult to identify what is hot and what is not for the target demographic as it changes rapidly and our deals are not fast. It may take us 3-6 months to get the contract signed, followed by 3-9 months to get the product produced, shipped and listed on stores. You’re talking 12 months which is the quickest you can get a product out in the market. By that time, some of the trends have gone! We have to be extremely cautious about what we launch and select the properties with a detailed eye.
Where do you see most of your consumers coming from that want to buy merchandise?
Saugato Bhowmik: At the moment, most of our consumers come in from six metros but over the next 3-4 years, I do predict that half of our audiences will come from beyond the metro cities because of e-commerce and a lot of local animation licensing taking off.
What’s your distribution strength and how do you plan on penetrating rural India?
Saugato Bhowmik: We want to tap into everyone from rural and urban equally. We want to tap into people from all kinds of economy strata and not just have one kind of consumers but have a wide portfolio.
What are your online sales like?
Saugato Bhowmik: E-commerce definitely gives us a lot of access into cities and towns where we did not have any presence in. But, discoverability has always been a challenge on online platforms and we work with our partners to improve our discoverability.
How do you choose your partners?
Saugato Bhowmik: For us to decide on a successful partnership, we ensure the partners have enough expertise and professionalism. Product quality is most important and ensuring the partner has good distribution is also needed.
Do you think counterfeit is a challenge for the licensing industry or does it not bother you?
Saugato Bhowmik: Imitation products only get sold if there’s a demand and it makes us happy to see that there is a demand. We do take actions from time to time to send the message out but today, license merchandising business is not yet equipped to address everyone in the Indian market and gradually over a period of time, counterfeiting will go away as our technology and reach gets better. It’s what happened to music streaming, where there was a point when nobody paid for music streaming but today music piracy has gone away. Technology changed the game for them and while it might not change the game completely for us but technology will change the industry.
Dan Frugtniet: We have reduced counterfeit with direct action by raids and seizures. I think it’s important to educate the consumers about the health risks of giving imitated toys to their kids. If not today, these things will eventually stop.
How do you view the licensing business in India going forward?
Saugato Bhowmik: I think more and more players will keep coming in because the industry is going to grow. I think a lot of international players will come in and a lot of Indian brands will also start to understand the licensing business and they will get into it.
What is your strategy and plan for Viacom18 Consumer Product growth? How do you want to take the business forward?
Saugato Bhowmik: The plan is to just keep growing very aggressively in high double digits every year because we want to make it a large scale profitable business. We want to continuously grow our existing brand portfolio and bring in more brands, open new categories and new experiences categories. A lot of hard work ahead but an exciting time.
